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Strategic Management – Group Work

AirAsia realised restaurant dream with ‘Santan’


outlet at Mid Valley
AirAsia’s of opening a restaurant is apparently materialising as group CEO and CEO of
airasia.com Tony Fernandes announced on Twitter that the airline is opening its first Santan
restaurant in Mid Valley Megamall last December 2019. He added that: “Who would have
thought airline food to restaurant? Franchises available soon.” Fernandes also told followers
that this is their chance to own ASEAN’s first fast food restaurant.

Meanwhile, he added on LinkedIn that the restaurant will be known as Santan and T&Co, and it
aims to be a highly efficient fast food chain that specialises in ASEAN dishes at affordable
prices. Fernandes added that it will be the first ASEAN fast food franchise.

“It will bring people together through our shared love for ASEAN food under one roof and
trigger wonderful memories from your trips with us to your favourite ASEAN countries and
beyond. Along the way, we also hope to empower the ASEAN communities,” he added.

According to Tony Fernandes, Santan and T&Co will be the next “digital restaurant”. The food
preparation process will be automated as much as possible. While the involvement of these
devices will include basic tasks at first, Fernandes said the ultimate aim is for the installation of
machines that are able to interact with most kitchen equipment, such as blenders, whisks,
knives and hobs.

Consumers will get to experience a seamless and convenient digital journey at its digital
ordering facilities. “You will make your orders at digital kiosks, while a camera scans your face
to process payment in less than a second,” Fernandes explained.

He added that the kiosks serve as an additional key function, which is to provide AirAsia with
important data. Through AI and machine learning, AirAsia’s system is able to understand
consumers’ meal preferences, enabling it to customise the menu displayed for their next order
optimally. At the same time, AirAsia also gets a better understanding of food consumption
patterns, which enables it to do better forecasting for ingredient orders, thus reducing wastage.

AirAsia plans to use eco-friendly recyclable packaging. Energy-efficient digital screens will be
installed so that menu options can be changed from time-to-time without having to print new
physical menu cards, Fernandes said. He also said that the new restaurant will offer a fixed
number of menu options to ensure that it provides meals that are consistent without
compromising on taste and quality.
Strategic Management – Group Work

The fixed menu also translates to a targeted maximum serving time (from when orders are
placed to when customers take their seats) of four minutes. As such, consumers will be able to
spend more time eating their meals and socialising instead of spending that time waiting for
your food.

‘As part of Santan and T&Co’s expansion plans, we aim to achieve 100 franchisee-
operated restaurants in the next three to five years.’

According to him, franchise-related fees will be affordable to provide opportunities to those who
wish to venture into the food and beverage industry, but are hindered by the high costs
associated with opening and operating a franchised restaurant. AirAsia will also soon be
launching its virtual kitchen to assist local SMEs, entrepreneurs and even housewives to
operate off-site kitchens. This is in a bid to create, test and launch their food products. With
AirAsia’s delivery services, they will be able to reach out to a greater customer base across
Malaysia.

By leveraging on our big data, Fernandes said its airline partners will also be able to identify
and cater to any unmet demand for a particular cuisine, at the right time of the day, with the
optimal price point. Most importantly, Santan and T&Co will contribute to greater economic
growth by generating job opportunities, through its outlets, as well as partners.

Earlier this year, AirAsia reportedly mulled plans to launch a fast food restaurant offering meals
from its in-flight menu named “Santan”. Fernandes previously told US talk show host Larry King
that AirAsia believes in the quality of its in-flight menu and offerings, and thinks its food is
“fantastic”.

The airline recently reshuffled its leadership to support its transformation into a travel and
financial platform company, as well as to build airasia.com, the airline’s lifestyle eCommerce
platform, into a lifestyle brand. This saw Fernandes helm the dual role of CEO of airasia.com.
Meanwhile, Spencer Lee, Karen Chan, Aireen Omar and Bo Lingam also took on new roles as
a result of the reshuffle.

Questions:

1. Conduct an External & Internal Analysis of this new business venture, use SWOT/
Porter 5 Forces and Internal Analysis Tools (Management, Product, Finance and
Value Chain Analysis).
2. From your analysis, what business strategies (Apply Porter Generics Strategy Model)
would you recommend Tony to adopt so that this business venture will be profitable
and viable? (Come out as many as strategies you can think of, and condense and
priorities the strategies)
3. Identify Santan Restaurant critical success factors – Competitive Advantage (Products,
Services or Niche market)

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